In 2018, Government successful converted its related loans outstanding on the balance sheets of both Ghana Grid Company Limited (GRIDCo) and Ghana National Gas Company Limited (GNGC) into equity shares.
GRIDCo had outstanding loans originating from government totaling US$141.18 million, made up of a principal amount of US$133.6 million and accrued interest of US$7.5 million. In the case of Ghana Gas, a total of US$ 230 million in outstanding indebtednesss to government has been restructured.
This is according to the 2018 Fiscal Risk Statement, which was made available by the Ministry of Finance (MoF) in April this year.
This is to strengthen the financial positions of the two State-Owned Enterprises (SOE’s).
At the end of 2018, Ghana Gas was being owed US$ 735 millionm by VRA, after the balance sheet restructuring had taken place.
As part of measures to mitigate fiscal risks arising from the issuance of on-lending and guarantees to public entities and SOEs, government has developed and operationalized a Credit Risk Assessment Framework (CRAF), which is in consonance with Section 67(2) of the Public Financial Management Act, 2016 (Act 921). Loans to SOEs that are not repaid are a major source of fiscal leakages and guarantees provided by government on behalf of SOEs similarly represent significant contingent liabilities for the public purse. The energy sector has been the biggest source of such risks in recent years.
In 2018, six entities – GNGC, GNPC, GRIDCo, VRA, ECG and GWCL – were assessed, under the CRAF.
The report indicates that steps have been taken to tighten the approval mechanisms to ensure that only the most bankable projects are considered for on-lending facilities.
“Furthermore, Section 67(7) of the PFM Act is being enforced, which mandates MoF to take any necessary action to ensure SOEs comply with the terms of the facilities and honour their obligations.”
Currently, SOEs control over 50 percent of State assets.
There are about 86 SOEs operating in various sectors of the economy—45 are wholly-owned by the state while the remaining 41 are partially owned or are Joint Venture Companies (JVCs). 36 out of 45 wholly-owned SOEs are classified as commercial SOEs with the remaining 9 categorized as subvented agencies.
More than half – that is 26 – of the commercial SOEs are Limited Liability Companies (LLCs).
By Joshua W. Amlanu
